The federal government of Nigeria is at risk of a $2.3 billion fine in arbitration over an alleged breach of contract for the $5.8 billion Mambilla power project in Taraba state.
The project, a 3,050-megawatt hydropower facility, has stalled owing to legal and funding crises after Sunrise Power and Transmission Company Limited (SPTCL), a local content partner, was reportedly sidelined in the project by the ministry of power, works and housing.
SPTCL, who claimed to have been awarded the build, operate and transfer (BOT) contract in 2003, has dragged the federal government and its Chinese partners before the International Chamber of Commerce (ICC) in Paris, France.
A UK arbitration court recently awarded nearly $9 billion against Nigeria over a breach of contract with Process and Industrial Developments Limited (P&ID), earlier given the green light to build a natural gas development refinery.
Meanwhile, the China Exim Bank, which is expected to provide 85 per cent of the joint funding with the federal government for the Mambilla project, has insisted on compliance with due process and terms of the November 2017 engineering, procurement and construction (EPC) contract signed with the partners before releasing funds.
Leno Adesanya, chief executive officer of SPTCL, in a letter dated March 31, 2017 to Babatunde Fashola, minister of power works and housing, had accused the minister of reneging on his promise to support the project.
Adesanya said between 2003 and 2009, SPTCL had spent millions of dollars with financial and legal consultants to raise about $6 billion for the execution of the project, yet the company has suffered a lot over the years “through improper administrative interruptions and interventions”.
“While we feel a deep sense of loss that Nigeria is still discussing this project when it should have been commissioned a long time ago, if the original plan was followed,” Adesanya said.
In another letter dated June 20, 2017 to the then Acting President Yemi Osinbajo requesting his intervention in the matter, Adesanya accused Abba Kyari, chief of staff to President Muhammadu Buhari, of taking the unilateral decision of directing the ministry of power to sideline the company from the contract against the advice of Abubakar Malami, attorney-general of the federation (AGF).
In the letter dated July 24, 2017 to Osinbajo, with a copy to the chief of staff, Malami had said SPTCL should be engaged as a local content partner on the project “as a means of accommodating its prior contractual interests on the project”.
However, Malami backtracked a few weeks later.
In another letter dated August 17, 2017 to the company, the attorney-general of the federation said he issued the previous opinion on the project based on the limited materials provided at the time.
He added that there was no requisite federal executive council (FEC) approval for the project.
“The logical conclusion in the circumstances should be that there was no valid contract between Federal Government of Nigeria and SPTC in respect of the project or at all,” Malami wrote.
In his response to Malami, Gbolahan Elias, a senior advocate of Nigeria, said there was no statute as at 2003 when the contract was awarded to SPTCL requiring the consent of the FEC before a letter of award could be validly issued.
Elias added that the letter of award to SPTCL predated the enactment of the Infrastructure Concession Regulatory Commission (ICRC) Act of 2005 which requires approval of projects and contracts by FEC.
In a recent petition dated November 18, 2018 to the president and seen by TheCable, Adesanya alleged that the company was removed from the contract without due process.
“Mr. President can save the project from being enmeshed in another controversy as it occurred during the government of President Yar’Adua where a Presidential adviser allegedly took millions of dollars in bribes, and eventually led to the removal of the official and the termination of the $1.46b civil works contract,” the petition read.
“Your Excellency’s commitment to expeditiously execute the Project in June 2015 was communicated by the Honourable Attorney-General of the Federation, Mr. Abubakar Malami SAN (the “HAGF”) to the Honourable Minister of Power, Works and Housing (the “HMOPWH”) Mr. Babatunde Fashola SAN on the 20th of May, 2016; when the HAGF directed the HMOWPH to comply fully with all existing agreements between the Federal Government of Nigeria (the “FGN”) and Sunrise; basically the out-of-court Settlement, and the General Project Execution Agreement(s) of November 25th 2012.”
Adesanya alleged that Kyari had instructed three Chinese companies, Sinohhydro Corporation of China, China Ghezouba Group Corporation of China and China Geo-Engineering Group Corporation, to form a joint venture for the execution of the project.
“On the 22nd of May, 2017, Your Excellency’s COS instructed the HMOPWH to remove Sunrise from the Mambilla hydropower project, and instructed that CGGC, CGCOC and SINOHYDRO would execute the Project,” he said in the petition.
“Bearing in mind that Your Excellency was on medical vacation in the UK, and Professor Yemi Osinbajo SAN GCON was the Acting President, we petitioned then Acting President, and the HAGF in respect of the constitutionally powers of the COS to approve N2 trillion or $5.8 billion contract in your absence, and without Due Process.”
A presidency official however told News men that Kyari is being wrongly accused by Adesanya.
“People need to start coming up with credible lies against the chief of staff. The truth is that he is immune to lobbying and any form of pressure, be it political or material, because public interest must override any other interest regardless of who the beneficiary is. This has made him easy target for baseless attacks,” the official, who declined to be named.
The Mambilla power project, the biggest plant in the country, was conceived in 1982.
Construction was expected to take six years.
Source: The Cable
Nigeria and India are making moves to explore opportunities in renewable energy development as part of the international agreements signed by both countries.Indian High Commissioner, Nagabhushana Reddy, at a Business meeting in Abuja, said the home government was committed to deriving at least 30 per cent of its power needs from renewable energy by 2030.
Reddy noted that exploring areas of cooperation in renewable energy would build on existing partnerships between both countries, especially as Nigeria, was member of the International Solar Alliance (ISA).
According to him, ISA intends to provide dedicated platform for cooperation among solar resource rich countries and mobilise $1 trillion funds for future solar generation, storage and technology across the world.He said: “We are opening a new chapter of India-Nigeria economic engagement by moving into the power sector relating to renewable energy. India had been present in Nigeria in the power sector mostly in the areas of distribution and transmission.”
Reddy also said that both countries would sign a Memorandum of Understanding (MOU) in the renewable sector to create a joint working group to develop projects for enhanced and effective collaboration.
Earlier, President of Abuja Chamber of Commerce and Industry, Kayode Adetokunbo, called on the Federal Government to harmonise policies on renewable energy to create single body for the implementation of relevant policies. Adetokunbo said: “There is no clarity in policies and we need all the advantages solar power and renewable energy can offer and put it in one agency that has multi-sectoral approach so that other relevant agencies can work together as a team.”
He added that promoting synergy among stakeholders would create jobs and fast track economic development in line with the government’s economic growth plan.A representative of Nigerian chapter of Associated Chambers of Commerce and Industry of India, Rajneesh Gupta, said that there are ongoing enlightenment campaigns on promoting renewable energy in Nigeria.
He said: “Simba Solar has been educating Nigerians on renewable energy technologies, and how it can deliver value. We are also training electricians and budding entrepreneurs that can key into these technologies to the end users.”“Electricity generation is fluctuating this year, peaking 5,090megawatts as government continued to show determination to produce an energy mix with 30 per cent component of renewable energy out of the gross energy produced by 2030.”
Source: The Guardian
Nigeria is experiencing a remarkable paradox. The country has abundant energy resources – and yet many of its residents can’t access sufficient energy.
About 40% of Nigeria’s population don’t have access to electricity and around 70% of households rely on firewood for their most basic needs, like cooking. This is dangerous. Annually, 93 000 Nigerians die from smoke inhalation.
The government is trying to tackle its energy issues, particularly by focusing on renewable resources. For instance it has built more natural gas power plants. It has also increased the number of off-grid solar PV systems – which convert solar energy into electricity – in rural areas .
These interventions came after the Energy Commission of Nigeria, which is in charge of coordinating and supervising all energy functions and activities within each member state, conducted a number of studies. Their research aimed to ascertain the country’s future energy demand and supply projections. But the commission didn’t really address how demand could be met in an environmentally sustainable way.
We wanted to address this gap. So we conducted a study that identified efficient ways of meeting Nigeria’s energy demands at minimal cost and with low carbon emissions. Our results suggest that increasing the country’s renewable energy capacity and introducing nuclear energy will be the best approach.
This may seem like a strange combination, given ongoing controversies around nuclear power. But nuclear power produces low emissions and uranium ore is readily available in a number of Nigerian states.
Our results show that combining these improvements to energy efficiency with fuel switching and technology switching has the potential to lower energy demand by 826 Petajoules in 2040 (229,444 GWh). Fuel switching involves moving from one fuel type to another, such as from kerosene to liquefied petroleum gas. Technology switching is the process of changing conventional energy technologies to low carbon energy technologies. For example, petrol generators can be replaced with rooftop solar PV systems.
Here are some changes that Nigeria can make to properly harness its energy resources.
A range of changes
1. Improving technologies in the home
More households are starting to use safer, energy efficient cooking stoves. But these are more expensive than traditional firewood stoves. And people aren’t educated about the importance of energy efficiency. Consumer awareness is key.
2. Energy efficiency standards in buildings
Our study found that increasing solar PV systems in residential and commercial buildings could reduce energy consumption by more than half. The government should provide incentives for buildings with solar PV systems and reward those groups or organisations that maintain good standards of energy efficiency.
3. Making strides in the industrial sector
Improving energy efficiency in the industrial sector is vital in achieving low carbon development. Simple switches like maintaining air conditioners and switching off lights during the day will really help.
Industry could also tap into the Global Energy Efficiency and Renewable Energy Fund. This provides capital for projects that aim to improve sustainable energy and energy efficiency.
4. The transport and electricity sector
Changes in the transport and electricity generation sectors could significantly lower greenhouse gas emissions in Nigeria. We found that encouraging public transport could make a huge difference.
Alternative vehicle fuels – liquefied petroleum gas, compressed natural gas, or bio fuels like petrol and ethanol, blended fuel and electricity for electric cars – will reduce the dependence on high emission emitting petrol and diesel fuels.
Nigeria’s government could adopt the global Autogas Incentive Policies, or develop something similar. Incentives include lowering vehicle taxes and removing barriers like parking restrictions. Some countries with successful policies of this nature include Germany, India, Japan and Thailand.
Carrying projects through
To its credit, the Nigerian government is already championing various initiatives designed to address the country’s widespread energy poverty.
For instance, low carbon development has been championed by the Renewable Energy Program, which is part of the Ministry of Environment. Through this programme the Nigerian government has set up projects to promote cleaner energy to mitigate climate change. Some projects include developing a bio fuel production complex in the northern part of Nigeria’s Ekiti state, and the establishment of a rice processing and power generating plant in Adamawa state.
The government has also started a campaign to raise public awareness about firewood and introduce clean cooking stoves which are more energy efficient and less polluting. Other projects include the 50 MW solar farm in Kaduna state, an energy efficient housing scheme, the Nigerian Clean Energy Access Programme and the introduction of compressed natural gas bus transport system in Nigeria .
These projects are mostly in the early stages. Authorities must commit to seeing them through.
Another important focus will be for Nigeria to develop homegrown solutions and technologies. This is because energy technologies such as solar PV manufactured overseas may be substandard. The government should provide incentives for local investors and promote indigenous technologies.
Some examples include the case of bio fuel incentives in Mozambique. There, private biofuel companies can benefit from tax exemptions when exporting bulk of biofuel products to Europe and the United States. In South Africa, the Renewable Energy Independent Power Producers Procurement Programme launched in 2011 led to the development of the wind industry with an increase in local content and a rise in Black Economic Empowerment.
Nigeria and Ghana’s governments have declared support for and partnership with local solar PV manufacturers to boost local manufacturing of solar PV systems. With policy incentives and government support, Nigeria can tackle its energy crisis and improve its energy access.